Asian Shares Mixed Before US Events; Shippers Fall

SINGAPORE (MarketWatch) -- Asian share markets were mixed Tuesday before an expected U.S. Senate vote on a $827 billion stimulus package. Financial shares were higher in Tokyo while shipping stocks were lower on profit-taking despite yet another rise in a key shipping index.

There was heavy action in foreign exchange markets with European currencies and the Australian dollar sliding on reports Russian banks and companies may look for help to reschedule $400 billion in loans.

Stocks had no strong lead from Wall Street, which ended steady as investors awaited Treasury Secretary Timothy Geithner's briefing on his bank sector plan and with lawmakers expected to vote later Tuesday on the White House-backed stimulus package.

"Many investors have already squared positions and are likely to sit tight," said Kenichi Hirano, operating officer at Tachibana Securities in Tokyo.

U.S. stock futures were just slightly lower in screen trade, reflecting the holding pattern that markets were in, and some doubted Asian markets would be able to hold onto their gains of recent days.

"We expect risk aversion to stay. Investor focus will likely remain on global growth conditions as the banking bailout will likely not provide the quick fix that some are expecting and market expectations remain firmly to the downside," said analysts at UBS.

The U.S. legislation passed a key test in the Senate earlier Tuesday with a 61-36 vote to end delaying-tactics by conservative Republicans that had pushed debate into a seventh day; that set the stage for a final vote, which would send the package into a House-Senate conference to resolve significant differences between the chambers' respective bills.

President Obama pushed for the passage of the recovery plan at his first prime time news conference, warning a failure to act would only deepen the crisis - but did not provide any new clues about the plan's details.

Shipping stocks turned lower due to profit-taking on sharp gains recently, even though the Baltic Dry Index rose another 10.5% Monday, adding to its string of sharp gains; the index is a key barometer of rates for bulk shipping, and thus for overall demand.

In Seoul, STX Pan Ocean was down 2.2% and Hyundai Heavy was 0.9% lower. In Tokyo, Nippon Yusen was down 3.4% and Kawasaki Kisen Kaisha down 2.5%. Even Mitsui O.S.K. Lines, which usually tracks the BDI fairly closely due to its relatively large exposure to dry bulk operations, was down 1.6%.

Financial stocks were higher in Tokyo before the U.S. bank-sector briefing with Mitsubishi UFJ Financial Group adding 3.1% and Daiwa Securities up 3.9%; Tokio Marine Holdings added 4.2%.

Financial and mining stocks though were mostly lower in Sydney with BHP Billiton down 0.9% and Rio Tinto falling 2.1%; ANZ Bank had fallen 1.8%.

AWB sank 20.1% after the agricultural company reported operating conditions deteriorated notably in the four months ended Jan. 31 and said it expected profit in its fiscal first half ending March 31 to be down 45% to 55% from an actual A$22.3 million in the year-earlier period.

Korean shares as a whole were hurt by selling by foreigners - after a nine-session streak as net buyers. "But hopes for China's stimulus plans and a potential Bank of Korea rate cut on Thursday may prevent a sharp fall in the Kospi," said Oh Tae-dong at Taurus Investment & Securities.

The Shanghai Composite index turned higher, adding 0.9%, after January data showing the consumer price index rose 1.0% on the year, more than the 0.6% expected in a Dow Jones Newswires poll of economists.

The data eased concerns about the chance of a deflationary spiral, with food stocks gaining on a rise in food prices in the month due to Chinese New Year demand; Shandong Denghai Seeds added 6.5%.

Malaysia's benchmark stock index was up 0.6% and Singapore's Straits Times index 0.4% higher, with Indonesian shares down 0.7%. In the Philippines, the PSEi shed 1.6% after a four-day gain.

In currency markets the euro had fallen against both the U.S. dollar and Japanese yen, to $1.2869 from $1.3022 late in New York, and Y117.82 from Y119.16; the Australian dollar was lower against both the U.S. dollar and yen, caught up in the risk aversion sweeping foreign exchange trade.

Traders in Sydney and Tokyo cited a report in the Nikkei which quoted the head of Russia's biggest banking association as saying Russian banks and businesses may ask foreign banks to reschedule loans worth $400 billion.

The British pound and Swiss franc were also hurt against the U.S. dollar and the Japanese yen, due in part to their geographic proximity to the Russian woes.

"This may be refocussing attention back on Eastern European financial troubles. The way things are going today, we could be on the cusp of a major break down in the euro," said ABN Amro strategist Greg Gibbs.

There was selling of the euro and Australian dollar by Japanese companies and institutional investors, with this likely to continue in the lead-up to the Japanese fiscal year end in March, said Westpac strategist Robert Rennie.

The U.S. dollar was fairly quiet in comparison against the yen, at Y91.56 from Y91.47.

Japanese government bonds were lower on gains in the Nikkei and before an auction of five-year notes; March futures fell 0.13 to 138.43 points with the yield on the 10-year note up 1.5 basis points.

China government bonds were slightly lower on the January inflation data, with the Shanghai Stock Exchange government bond index at 119.72, compared with its previous close at 119.94.

Spot gold was up $3.80 at $898.80 a troy ounce from late New York levels, while March Nymex crude oil futures was up 18 cents on Globex at $39.74 a barrel.

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